Direct File is the most important tech product of 2024, helping you to finally file your taxes for free

Direct File will be the top tech product to compete against Apple and OpenAI. The tax filing service emerges after a scandal involving Intuit's tax preparation software.

• Forget Apple's nerd goggles and OpenAI's ChatGPT.
• The most important tech product of 2024 comes from an unusual source. 
• It could save millions of Americans some real money.

On Friday, former Meta product manager Dan Grover tweeted about a new service that he said will vie with Apple's goggles and OpenAI's ChatGPT as the "biggest/most impactful product launch" in tech. 

I'll go further and say this offering is the most important tech product of 2024. It doesn't need energy sucking AI data centers, or legally dubious data-siphoning to work. It doesn't require you to download an app and pay a 30% App Store tax to Apple. It won't make anyone in Silicon Valley rich. It won't help build another giant tech platform. There will be no IPO or glowing profile of the founder on the cover of Fortune or Forbes. 

What it could do is something that Silicon Valley always claims to do, but sometimes fails to deliver on: Help millions of regular people. 

Direct File

I'm talking about Direct File, a new way for many Americans to file their taxes for free. The IRS is launching the online service as a pilot program this tax season, which starts in earnest later this month.

Americans who qualify for free tax preparation earn an annual adjusted gross income of no more than $79,000. (AGI is your total income minus any eligible deductions or adjustments). The median US household income in the US is about $75,000. That's a heck of a lot of people who can use Direct File.

At the moment, it's available in 12 states including Arizona, California, Florida, New York, and Texas. Many other states are interested in taking part, the IRS says. It's mainly for people with relatively simple tax situations, but millions of taxpayers should be able to save a lot of money using Direct File. 

The Intuit scandal

The story behind this new product is even more interesting. It reveals how some companies take advantage of consumers' limited tech knowledge, and how Google Search was cynically used to trick lower-income Americans into paying for something they didn't need.

The scandal centers on Intuit, a major provider of tax preparation software. You can read all about its infuriating shenanigans over at ProPublica, which investigated the company.

Most wealthy countries make filing your taxes simple and free. Not the US, though. And Intuit waged a long campaign to stop any US government initiatives to make filing taxes easier or cheaper, according to ProPublica.

An internal planning document also suggested that Intuit intentionally targeted minorities for media manipulation, according to the ProPublica investigation. "Buy ads for op-eds/editorials/stories in African American and Latino media," stated that PowerPoint slide dug up by the publication.

Hiding from Google

About two decades ago, Intuit and other companies agreed to provide free tax prep for lower-income people in return for the IRS pledging not to create its own offering. Then Intuit tried to undermine the system known as Free File. Intuit hid its its Free File web page from Google's search engine, making it nearly impossible for people to find the free filing service, according to ProPublica.

ProPublica found tax prep competitors doing similar things. It also found Intuit engaging in other tactics, such as using unclear software design to allegedly trick people into upgrading to paid offerings. This disingenuous behavior was happening while Intuit outwardly presented the standard Silicon Valley corporate message of being a good citizen and helping the world.

Intuit's response

"Any assertions that Intuit did not and does not promote free tax preparation are wholly inaccurate and not based on facts," Tania Mercado, a spokesperson for Intuit, wrote in an email to BI. "Intuit has always been clear, fair, and transparent with its customers and is committed to free tax preparation."

She also questioned the value of the new Direct File service in various ways.

"Filing taxes without someone advocating for your highest refund could be a recipe for overpaying the Internal Revenue Service and Departments of Revenue," Mercado wrote in a statement.

She pointed out that Direct File is not free because the IRS is funded by taxpayer dollars, calling Direct File "a thinly veiled scheme where billions of taxpayer dollars will be unnecessarily used to pay for something already completely free of charge today — free to the taxpayer and actually free for the government."

Intuit ended up paying $141 million to victims to settle allegations it deceived low-income Americans into paying to file their taxes when they actually qualified to file for free. In a blog, the company didn't admit wrongdoing. Intuit made more than $2 billion in its latest fiscal year.

Give Direct File a try

Which brings us back to the new Direct File service. With hindsight, the IRS maybe should have just built this free tax prep service itself 20 years ago, instead of trusting for-profit companies to do it. Today, though, there are more web and cloud tools available to make such a service available more efficiently. 

Treasury Secretary Janet Yellen said the pilot program will start small in 2024, to help the IRS to test it and learn from taxpayers.

If you live in these 12 states, and you have a relatively simple tax situation, such as W-2 salary income and taking the standard deduction, you should check out Direct File this tax season. It could save you some real money. 

And don't rely on Google to find the right IRS website for this! The search engine is stuffed with ads these days, which makes finding what you really need more difficult. 

When I searched for "free file taxes" this weekend, the top of Google's results page was full of ads. Guess who was top of the paid list? Intuit's TurboTax. At the very bottom – almost out of view on my full sized laptop – was the actual IRS website you need. 

I've linked to it here so you don't have to search. And here's the site for Direct File.